Don,
Musings from a lurker who truly appreciates all of the great analysis on the MDA thread, especially yours Don. Today seems to be a day of serious momentum shift in the markets for all the reasons you guys so expertly dissect - break of support in the DOT, COMP, etc. and the strength of the TYX, etc. BTW, I see 5.72 as confirmation that the longer trend in interest rates is now up and the long bond is in trouble. Valuation will become an increasingly important factor - as rates increase, P/Es must fall.
There are a few more ominous signs. The BKX has broken down today. If MER and C drop like a rock on the same day that the DOT and COMP break key supports, it's not good for the markets.
Also, look at GE. Try as they might to prop it up, today it closed under 105, and key 89 day EMA support. GE was in similar technical shape just before the market break late last August. And GE's current price action rally can't be chalked up to sector rotation. After all, what sector is GE in? It's in most of them. IT IS STILL the Dow bell weather and if it breaks below 105 again tomorrow, it will portend serious trouble in blue chip growth stocks.
MSFT and CSCO, MER and C, PFE, WMT, AOL, AMZN - they are all sector and they all look sick. Add to these the spectre of higher interest rates fueled by a booming XOI, OSX and XAU (higher inflation), a tired GE, the bogus Dow theory confirmation in the $TRAN, and record over-valuation of the SPX using the FED model - and you PROBABLY have enough to pour ice water on this orgy for a while. BWDIK?
To reiterate, thank you for all your wonderful work and guidance and thanks to all of the other regular contributors to the thread who make it easy for simple folk such as myself to get a handle on these crazy markets. Best regards.
Franco |
